He's already made two noteworthy venture investments there in the
space of a few months. In October 2010, he
invested $3 million in online accounting firm Xero, which is
based (and publicly traded) in New Zealand. Then he
invested $4 million in Pacific Fiber, an ambitious company
that is building a fiber-optic cable from Australia to New
Zealand to the US and is raising $300-400 million more to do so.

These investments aren't just one-offs. Thiel has set up a local
venture firm called Valar Ventures. Valar Ventures LP was
registered in New Zealand in July 2009, more than a year before
Thiel's first known New Zealand investment, and is managed by
Valar Capital Management LLC, based in San Francisco, according
to official records. Valar Ventures LP's offices are at prominent
New Zealand law firm Bell Gully, which suggests it doesn't have
full time staff yet. Peter Thiel founded two other companies in
New Zealand: Second Star Limited, where he is sole shareholder,
and Silverarc Advisors.

The people associated with these New Zealand companies, all of
them close associates of Thiel at his hedge fund Clarium Capital,
show how serious Thiel is about New Zealand. Valar Capital
Management is managed by Nathan Linn, VP of Finance at Clarium.
On the boards of Thiel's New Zealand companies are Matt
Danzeisen, Principal at Clarium, James Fitzgerald, COO and
General Counsel at Clarium, and Andrew McCormack, VP Corporate
Development at Clarium and previously Thiel's assistant at
PayPal.

Peter Thiel is a PayPal co-founder,
early Facebook investor and hedge fund manager

Thiel is nothing if not an ambitious, long-term thinker, so
what's the big picture here? What could the famously contrarian
investor possibly see in a country of 4 million people whose
economy is mostly based on agriculture and tourism?

Here's a thought: maybe Peter Thiel wants to turn New Zealand
into the next Silicon Valley. Or maybe even the libertarian
utopia of his dreams.

Investing in a huge undersea fiber optic cable is typically a
safe, low-return investment, which isn't the kind of investments
Thiel goes after. But bringing high speed internet into New
Zealand would be a first step to turning the country into a new
Silicon Valley.

The name of Thiel's firm Valar Ventures comes from J.R.R.
Tolkien's Lord of the Rings universe. Thiel is a huge Tolkien fan
and the Lord of the Rings movies were filmed in New Zealand. In
Tolkien's legendarium, the Valar are deities who created the
world of Middle-Earth (portrayed by New Zealand in the movies)
and then descended on it to help nurture its infancy and
development.

Reached about this idea, Thiel said: “New Zealand is already
utopia. But Silicon Valley and New Zealand can learn a lot
from each other, and we want to help make that happen.” So Thiel
is clearly in it for the long run.

Thiel is very libertarian, and New Zealand already has some of
the most free-market policies in the world. Thiel is also a donor
to the Seasteading Institute, a foundation that wants to create
libertarian self-sustaining colonies out at sea. A popular
libertarian cause is the "Free State Project" to get tens of
thousands of libertarians to emigrate to New Hampshire and take
over the government democratically to reshape the state according
to libertarian ideals.

Thiel has been frustrated at US policies and generally been
bearish on the US economy. He believes that the world needs a new
wave of radical innovation in fields like artificial intelligence
and robotics to escape impending disaster and has seemed
increasingly skeptical that the US, the world leader in
innovation, can deliver that.

So what are Thiel's chances of turning New Zealand in a new tech
mecca?

We spoke with a tech entrepreneur who lived in New Zealand who
said that the country has a lot of potential as a tech hub. When
asked about the culture, the person said: "They're a brand new
country. 160 years old. They have no fear of innovation or
failure." They also mentioned the country's relaxed, laid back
atmosphere. Sounds a lot like Silicon Valley to us.

Less Californian: the government is very efficient and
business-friendly. The immigration services will actually put a
foreign entrepreneur in touch with potential investors -- not
something you can exactly say of the US's byzantine immigration
system, or most other countries' for that matter. Utopia indeed.

New Zealand already has a handful of world-beating startups like
Wine-Searcher.com, the world's top wine search engine, which is
based in Auckland. A quick survey of online jobs listings in New
Zealand shows great demand for developers. So there's definitely
the inklings of something.

There's a precedent in Israel, also a young, small, gorgeous
"island" nation with an immigrant population that kick-started
one of the world's most vibrant tech industries.

After the financial crisis, the New Zealand government unveiled
plans to turn New Zealand into an offshore financial hub: because
of its location, the New Zealand markets are the first to open
each day, which could give an edge to firms located there. This
is something that could come in handy to Thiel's hedge fund.
Xero, the company Thiel invested in, was founded in 2006 and went
public in 2007, so their stock market seems much less broken than
the US's.

Tech, high finance, small government -- when you think about it,
it makes perfect sense for Thiel. As big fans of rugby and
startups, we think Thiel's involvement in New Zealand is an
awesome story. We can't wait to see how it develops.